Issues in Jewish Business Ethics

Stories of scandals in the world of big business are splashed across the front pages of newspapers with dismaying frequency--in the U.S., about insider trading, the failures of deregulated savings-and-loan institutions, and the bankruptcy of corporations whose senior managers emptied them of assets for their own gain; and in Israel, about the collapse of the banking system after banks encouraged potential depositors to invest in bank shares instead.

Such well-publicized revelations reflect only the most egregious violations of ethical norms in commerce and finance on a grand scale.
Ethical decisions pervade our economic behavior, and wherever new forms of business relationships develop, new ethical questions emerge.

Scholars and rabbis have explored the implications of the ethical principles and economic regulations of rabbinic tradition for contemporary problems of previously unimagined complexity. They have often done so with ethical sensitivity and economic subtlety, but their judgements inevitably reflect their own views of economic life and of ethics as much as they reflect those of the authors whose precedents they cite. Consequently, there is often lively debate about which rules are to be applied to a given situation and in what way those rules should be interpreted.

Insider trading has been categorized by Jewish scholars as a violation of ethical norms and of specific commercial legislation. Jewish commercial law makes specific demands on sellers and buyers, requiring full disclosure of information relating to the value of the goods being traded. This is no less true if the goods are shares of a corporation than if they are physical items. A transaction effected under falsified conditions may be cancelled. If the information withheld by buyer or seller was gained by virtue of some office or task that provided access to privileged information, the sale or purchase made on the basis of this information also constitutes dealing in stolen property.

Intellectual property protection developed late in Jewish law, beginning with early modern rabbis’ bans on republication of printed materials. Such restrictions were designed to protect the printers’ investments, both for reasons of economic justice and because of cultural concerns: to help ensure the wide availability of Jewish religious texts once the printing industry began to make that possible. (Allowing printers’ works to be pirated would have reduced their expected profit and thus curtailed Hebrew printing ventures.) The latter motivation may be irrelevant to the copying of music, computer games, or DVD films, but considerations of economic justice have led to a broadening of the traditional ban to include a wider recognition of the validity of copyright restrictions.